Search results

In developing countries, banks play a major role by acting as a conduit for the effective mobilization of funds from the surplus sectors of an economy for onward lending to the deficit sectors for productive investments that will in turn increase the level of employment and economic growth. There has being a rising trend in unemployment rate in Nigeria and South Africa and hence, the need for the study to assess the effectiveness of banking system credit in curbing unemployment rate by making a comparative analysis of Nigeria and South Africa covering the period of 1991–2018.

The study employed the unit root test, Johansen cointegration test, vector error correction model and VAR impulse response function in determining the relationship between the variables.

The major findings revealed that banking system credit matters in curbing unemployment rate in South Africa than in Nigeria. Also, other macroeconomic factors such as lending rate, inflation rate, Government expenditure and population growth were significant enough in influencing unemployment rate in South Africa than in Nigeria. Foreign direct investment was a significant factor in reducing unemployment rate in Nigeria than in South Africa. The cointegration test showed a long-term relationship between the variables in both countries while the speed of adjustment coefficient of the vector error correction model is faster in South Africa than in Nigeria.

Previous empirical studies on the relationship between banking system credit and unemployment rate have focused much on other regions such as Asia and Europe. Thus, the study is unique as it focused on the African region and also made a comparative analysis by testing the Keynesian theory of employment, interest and money on two emerging African economies which are Nigeria and South Africa.

The aim of the paper is to investigate Goodwin’s growth cycle in the Indian organised manufacturing industries.

The methodology is based on bi-variate differential equation, econometrics model like log-linear regression and Autoregressive Distributed Lag model. An empirical investigation is conducted on data from the Annual Survey of Industries from 1980 to 2018 time period.

The results indicate that though the original Goodwin model estimates deviated from data estimates, its modified (neo-Goodwin) model are found to be equivalent to the data estimates. Moreover, in contrast to the original model, the capital accumulation rate (investment to profit ratio) is not assumed to be unitary in the modified Goodwin model. Furthermore, the labour market-led and cost effect conditions of the Goodwin cycle are empirically verified by investigating the interdependency between employment rate and wage share. Lastly, the short- and long-run Goodwin cycles are observed to be moving in anti-clockwise direction in the employment rate and wage share bi-dimensional plane, thus confirming the existence of profit-led distribution where wage share continuously reducing with high employment.

This study opens the discussion on application of capitalistic model in the emerging economy and also suggests to incorporate some theoretical models like Kaldorian, Keynesian, Kaleckian or Schumpetrian into the Goodwin cycle.

This is the first paper which empirically examines the capitalistic nature of Indian organised manufacturing industries through the lens of Goodwin growth cycle and then extend it to the Neo-Goodwin model by relaxing one of the unrealistic assumption regarding unitary investment to profit ratio.

We investigate the impact of private credit expansion and contraction on the unemployment rate in Economic Community of West African States (ECOWAS) countries.

Credit expansion and contraction are measured using a three-level criterion. The fixed effect panel regression model was used to estimate the impact of private credit contraction and expansion on the unemployment rate in ECOWAS countries.

Private credit contraction significantly increases the unemployment rate in ECOWAS countries. Private credit expansion does not have a significant effect on the unemployment rate. Real GDP growth has a significant negative effect on the unemployment rate which supports the prediction of the Okun’s Law while the inflation rate has a positive and insignificant effect on the rate of unemployment in ECOWAS countries which contradicts the prediction of the Phillips curve.

Policymakers in ECOWAS countries need to be cautious when introducing policies that lead to private credit contraction as it could increase unemployment. Policymakers in ECOWAS countries should also find the “threshold” below which private credit contraction will worsen the unemployment rate and introduce policy measures to ensure that private credit contraction does not fall below the threshold.

The literature has not examined the factors leading to tight labor markets or unemployment in West African countries.

The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-12-2023-0939.

This study aims to elucidate the dynamics of monetary and fiscal policy interactions in Brazil, focusing on the impacts of positive shocks in government consumption and interest rates. By comparing rational and behavioral agent responses, it clarifies how these frameworks influence gross domestic product (GDP), inflation, private and government consumption and nominal interest rates.

The study employs a new Keynesian dynamic stochastic general equilibrium (DSGE) model with Bayesian estimation from 2000Q1 to 2022Q4, capturing rational and behavioral behaviors with adjustments for Brazilian economic idiosyncrasies. Impulse response functions (IRF) assess the dynamic effects of policy shocks, providing a comparative analysis of the two frameworks.

Behavioral agents show greater initial sensitivity to policy shocks, causing more pronounced fluctuations in GDP, inflation and private consumption compared to rational agents. Over time, the behavioral approach leads to a more robust recovery, while the rational approach results in a quicker return to equilibrium but less pronounced long-term recovery. The study also finds fiscal policy can partially offset the negative impacts of monetary tightening, with a more delayed effect in the behavioral model.

This paper provides insights into the interplay between monetary and fiscal policies under different agent expectations, emphasizing the importance of incorporating behavioral elements into macroeconomic models to better capture policy dynamics in emerging markets.

The purpose of the study is to investigate the impact of artificial intelligence (AI), machine learning (ML), and data science (DS) on unemployment rates across ten high-income economies from 2015 to 2023.

This study takes a unique approach by employing a dynamic panel data (DPD) model with a generalised method of moments (GMM) estimator to address potential biases. The methodology includes extensive validation through Sargan, Hansen, and Arellano-Bond tests, ensuring the robustness of the results and adding a novel perspective to the field of AI and unemployment dynamics.

The study’s findings are paramount, challenging prevailing concerns in AI, ML, and DS, demonstrating an insignificant impact on unemployment and contradicting common fears of job loss due to these technologies. The analysis also reveals a positive correlation (0.298) between larger government size and higher unemployment, suggesting bureaucratic inefficiencies that may hinder job growth. Conversely, a negative correlation (−0.201) between increased labour productivity and unemployment suggests that technological advancements can promote job creation by enhancing efficiency. These results refute the notion that technology inherently leads to job losses, positioning AI and related technologies as drivers of innovation and expansion within the labour market.

The study’s findings suggest a promising outlook, positioning AI as a catalyst for the expansion and metamorphosis of employment rather than solely a catalyst for automation and job displacement. This insight presents a significant opportunity for AI and related technologies to improve labour markets and strategically mitigate unemployment. To harness the benefits of technological progress effectively, authorities and enterprises must carefully evaluate the balance between government spending and its impact on unemployment. This proposed strategy can potentially reinvent governmental initiatives and stimulate investment in AI, thereby bolstering economic and labour market reliability.

The results provide significant perspectives for policymakers and direct further investigations on the influence of AI on labour markets. The analysis results contradict the common belief of technology job loss. The study’s results are shown to be reliable by the Sargan, Hansen, and Arellano-Bond tests. It adds to the discussion on the role of AI in the future of work, proposing a detailed effect of AI on employment and promoting a strategic method for integrating AI into the labour market.

India’s historical fiscal performance has featured elevated deficit levels. Driven by the imperative need for fiscal stimulus measures in response to the crisis, efforts toward fiscal consolidation from 2003 to 2008 were reversed in 2008–2009 due to the financial crisis. These stimulus actions are believed to have wielded a notable influence on inflation dynamics. Presumably, a high inflation rate hinders growth and inflicts severe welfare costs. Accordingly, the principal objective of this paper is to scrutinise the threshold effects of fiscal deficit on inflation within the context of the Indian economy.

We employed the Smooth Transition Autoregressive (STAR) Model, a robust tool for capturing non-linear relationships, to discern the specific threshold level of fiscal deficit. Our analysis encompasses annual data spanning from 1971 to 2020. Additionally, we have leveraged the Toda-Yamamoto causality test to establish the existence and direction of a causal connection between fiscal deficit and inflation in the Indian economy.

Our analysis pinpointed a critical threshold level of 3.40% for fiscal deficit, a value beyond which inflation dynamics in India undergo a marked transition, signifying the presence of significant non-linear effects. Moreover, the results derived from the Toda-Yamamoto causality test offer substantiating evidence of a causal relationship originating from the fiscal deficit and leading to inflation within the Indian economic framework.

The findings of our study carry significant implications, particularly for the formulation and execution of both fiscal and monetary policies. Understanding the threshold effects of fiscal deficit on inflation in India provides policymakers with valuable insights into achieving a harmonious balance between these two critical economic variables.

To the best of our knowledge, this study is the first of its kind to empirically investigate threshold effects of fiscal deficit on inflation in India from a non-linear perspective using the Smooth Transition Autoregression (STAR) model.

The purpose of this paper is to explore the degree of inflation persistence across all US metro areas over the post-pandemic period.

Both the Multivariate Core Trend (MCT) model and a fractional integration model, that is the Multivariate Unobserved-Components Stochastic Volatility Outlier-adjusted (MUCSVO) model are estimated.

The findings provide clear evidence of a significant inflation persistence in ten metro areas and the absence of persistence in the remaining areas, implying that in the former areas, inflation clearly indicates a strong persistent pattern. In other words, in these ten areas, the persistent component dominates the evolution of the trend and stands as a significant driver of inflation.

The findings have important implications for US policymakers to consider implementing more targeted policies to address inflation in specific metro areas to reduce the overall inflation rate, or they may need to consider tailoring fiscal policies to address inflationary pressures in specific metro areas. The findings illustrate the need for targeted policy interventions to address inflationary pressures in specific areas, as well as the importance of understanding the drivers of inflation persistence to develop effective policy responses. The findings also provide insights to firms on how to mitigate the risks of inflation. They may need to diversify their products or supplier base so that they do not rely on areas experiencing persistent inflation.

This paper contributes to the literature by extending the discussion of the impact of the recent pandemic crisis on US regional inflation. The findings have important implications for US policymakers to consider implementing more targeted policies to address inflation in specific metro areas to reduce the overall inflation rate, or they may need to consider tailoring fiscal policies to address inflationary pressures in specific metro areas. The findings illustrate the need for targeted policy interventions to address inflationary pressures in specific areas, as well as the importance of understanding the drivers of inflation persistence to develop effective policy responses. The findings also provide insights to firms on how to mitigate the risks of inflation. They may need to diversify their products or supplier base so that they do not rely on areas experiencing persistent inflation.

Under the trend of global economic integration and the new context of stagflation, frequent fluctuations in international interest rates are exerting far-reaching impacts on the world economy. In this paper, the transmission mechanism of the impact of fluctuations in international interest rates (specifically, the American interest rate) on the bankruptcy risk in China's pillar industry, the construction industry (which is also sensitive to interest rates), is examined.

Using an improved contingent claims analysis, the bankruptcy risk of enterprises is calculated in this paper. Additionally, an individual fixed-effects model is developed to investigate the mediating effects of international interest rates on the bankruptcy risk in the Chinese construction industry. The heterogeneity of subindustries in the industrial chain and the impact of China's energy consumption structure are also analysed in this paper.

The findings show that fluctuations in international interest rates, which affect the bankruptcy risk of China's construction industry, are mainly transmitted through two major pathways, namely, commodity price effects and exchange rate effects. In addition, the authors examine the important impact of China's energy consumption structure on risk transmission and assess the transmission and sharing of risks within the industrial chain.

First, in the research field, the study of international interest rate risk is extended to domestic-oriented industries. Second, in terms of the research content, this paper is focused on China-specific issues, including the significant influence of China's energy consumption structure characteristics and the risk contagion (and risk sharing) as determined by the current development of the Chinese construction industry. Third, in terms of research methods a modified contingent claim analysis approach to bankruptcy risk indicators is adopted for this study, thus overcoming the problems of data frequency, market sentiment and financial data fraud, which are issues that are ignored by most relevant studies.

The purpose of this study is to investigate the interplay between fiscal dominance and monetary policy in South Africa from 1960 to 2023.

The study employs a structural vector autoregression (SVAR) medel to analyze the relationship between fiscal dominance and monetary policy. Short-term and long-term shocks of government borrowing and deficits are examined to understand their impact on inflation dynamics.

Fiscal dominance has a significant effect both in the short and long run. There is evidence that government debt and deficits increase inflation, overriding the effects of monetary policy aimed at maintaining price stability. On the other hand, the study reveals that money supply shocks have a greater effect in reducing fiscal dominance compared to interest rate shocks. The variance movement on inflation is significantly explained by government debt and deficits. This emphasizes the persistence of inflationary pressures associated with fiscal dominance, highlighting the importance of effective policy interventions to mitigate inflationary risks.

This study contributes to the existing literature by providing insights into the dynamics of fiscal dominance in South Africa. Moreover, this study extends the theoretical framework of the fiscal theory of the price level (FTPL) and the government budget constraint. This study contributes valuable insights into the dynamics of fiscal dominance in South Africa and offers guidance for policymakers in formulating strategies to safeguard economic stability.

This study aims to discuss the behavioral economics and Islamic economic joint criticisms against the conceptual and economic political view of the mainstream.

The purpose of this study is to examine the effectiveness of mainstream economic policies in addressing unemployment. Furthermore, it critically assesses the mainstream perspective on unemployment within the contexts of Islamic economics and behavioral economics, separately. The commonalities and disparities between the approaches of Islamic economics and behavioral economics regarding unemployment are evaluated. Subsequently, the conventional viewpoint on unemployment is scrutinized from the combined standpoint of Islamic economics and behavioral economics. This article employs a theoretical approach to address these concerns.

Although there are some differences, the recommendations and values of Islamic Economics and behavioral economics in the context of unemployment are almost the same. And, more importantly, both approaches are similar in their emphasis on the ineffectiveness and distance from human values of mainstream economic policies.

This article is the first to examine unemployment from the joint perspectives of Islamic economics and behavioral economics. It is also the first article to criticize the mainstream view of unemployment from the common framework of these two approaches.